A World-Changing Encounter: When Web2 Migrants Meet the Web3 Bear Market
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A World-Changing Encounter: When Web2 Migrants Meet the Web3 Bear Market
Web3 opens up vast imagination and opportunities for Web2 newcomers, while the experience exported by Web2 builders helps Web3 create killer applications serving billions of users.
Navigating Web3 tides with focused insightsAuthor: LilyKing from Boundary, COO of Cobo, Sino-US lawyer, deeply researching social policy, collaboration mechanisms, and cooperative frameworks
Starting in the second half of 2021, Web3—the decentralized internet built on blockchain—became the new mainstream narrative of the crypto movement, propelled by philosophical venture capitalists like a16z. It quickly went mainstream, becoming a buzzword rivaling "the metaverse" as the next-generation internet.
It soon gained popularity among China's internet elite—just when winners of the previous wave of internet economy were hitting growth bottlenecks and struggling to maintain high-speed expansion. Many internet entrepreneurs and talents seeking new paths were drawn to Web3’s vision. “The migration from Web2 to Web3” and “Will China have a Web3?” became fashionable topics within the circle.
Alas, since early 2022, the pandemic, the Russia-Ukraine war, and Federal Reserve interest rate hikes dragged Web3 assets into a bear market. Many who previously felt superior in the Web3 space have now adopted more humble and open mindsets—some even joining Web2 platforms to experience life as delivery couriers.
In this bear market, Web2 and Web3 have become fellow sufferers, watching helplessly as old powers like oil tycoons and the Federal Reserve flex their muscles.
From Web2 to Web3: The First Wave of Migration Begins
In fact, many early adopters of blockchain in China were already founders, investors, and practitioners from the internet industry. While the popularity of the term "Web3 vs Web2" is recent, China's internet community has never been outsiders to the crypto movement—major Chinese tech companies have long invested in blockchain-related R&D.
However, Web3’s core principle is decentralization, which inherently relies on tokens to establish user ownership. This has limited its organic growth within China’s domestic internet ecosystem from the start.
Notably, overseas arms of Chinese Web2 platforms are actively expanding into NFTs—a domain with relatively lower regulatory risks. Bilibili recently launched its NFT series "Cheers UP" at the end of April and even added an NFT gateway in its international app version, allowing connections to users’ MetaMask wallets. Ele.me has also released an NFT series based on traditional Chinese cuisine, with its first NFT featuring a codfish lion head. Tencent has invested in the NFT platform Immutable X, while TikTok partnered with Immutable X to launch its own NFT series—"TikTok Top Moments."
These examples are merely ripples on the surface. Beneath lies a deeper undercurrent: funds, family offices, and executives and technical talent from major Chinese tech firms are passionately investing capital, resources, and personal commitment into the Web3 space.
The current bear market in Web3 does not appear sufficient to halt the tide of Web2 migrants—it still offers vastly greater future potential and token-based incentive mechanisms compared to Web2.
Web3’s master storytellers have painted a classic grand vision: in terms of development stage, Web3 resembles the internet of the 1990s. Thus, all its current issues are just growing pains. Who would want to miss out on such a once-in-a-generation opportunity?
The Backlash from the Old Economy
The crypto movement has always aimed to disrupt financial hegemony—including the Federal Reserve’s money printing and Wall Street’s market manipulation. Web3’s narrative further positions Web2 super-platforms like Facebook, Google, YouTube, and Twitter as primary targets, aiming to dismantle their monopolies and exploitation of user data and content.
Yet in this bear market, Web2 and Web3 assets have become fellow victims, both reacting nervously and in tandem to every move by the Federal Reserve.
Relatively resilient performers include Google and Apple—companies that have become essential in users’ daily lives. Even amid bearish market sentiment, they retain consistent usage and paying customers, providing value support. As a result, their year-to-date declines are only around 20%.
In contrast, many Web3 assets have suffered far steeper losses. After the infamous LUNA collapse, Web3 communities even began circulating dark humor like: “Before joining Web3, I thought zero was just a mindset.”
As inflation worsens, the Web3 community realizes: before toppling Web2, they must first withstand the backlash from the old economy.When young people face rising gas, food, and rent prices, no matter how devoted they are to creator economies, they inevitably cut spending on JPEG avatars and virtual land. As MC HotDog sings in his latest track “NFT”: “Metaverse? Can barely survive today—no time to worry about tomorrow.”
To resist the old economy, Web3 must become a user necessity—just like successful Web2 applications—and capture real-world economic value.
Winning Users Wins the World
Currently, the main user need fulfilled by Web3 applications is speculation.While speculation is indeed a strong mass-market demand, it is highly volatile. Whether DeFi, NFTs, or GameFi, user numbers and engagement levels almost entirely follow token price fluctuations.
Even metaverse games, once hailed as gateways to mass adoption, suddenly seem less fun in a bear market. In May, SANDBOX and Decentraland averaged only hundreds or dozens of daily active users (per DappRadar), mere fractions of mainstream Web2 games.
One major advantage of Web3 is its ability to use tokens to create co-ownership and shared success between users and platforms. However, token incentives cannot replace product-market fit or excellent user experience.
OpenSea is often criticized for not being “Web3 enough,” yet it still dominates 95% of the NFT trading market. Token-issuing platforms like LooksRare and Rarible have failed to challenge its leadership because they haven’t delivered better functionality or user experience.
This is precisely why Web3 so desperately needs the expertise of Web2 migrants.
Chinese Web2 builders have created products that won hundreds of millions of users. From Alipay and WeChat to Douyin and Xiaohongshu, Chinese Web2 products have led in functional innovation and user experience—even serving as models for U.S. tech giants to study.
Web3 certainly holds immense potential in fundamental application areas like payments, social networking, and entertainment—all familiar territories for Chinese Web2 builders. The experience brought by Web2 migrants can greatly accelerate Web3 apps in capturing user needs, refining user experience, and scaling user bases.
The arrival of these new migrants also brings business opportunities to Crypto Native teams—we’re not talking about treating them as exit liquidity.
Web2 entrepreneurs and investors are not short on capital or ambition, but they need Web3 partners to help them master blockchain’s decentralized infrastructure, complex tokenomics, and governance mechanisms of DAO-like decentralized organizations.The innovative sparks and chemical reactions from this collision are highly promising.
The Web3 Drama: Chinese Builders Won’t Be Absent
During the Web2 era, Chinese internet forces ranked second only to Silicon Valley. Many wonder whether they will still hold influence in Web3.
In fact, the experience Chinese teams accumulated during the Web2 era—building products for hundreds of millions of users—remains a key competitive edge in the Web3 era. Combined with over a decade of mining and exchange industries that fostered a robust Crypto Native community, even if local growth is constrained, Chinese builders will undoubtedly play pivotal roles in Asia’s Web3 transformation.
The Web3 narrative has long been dominated by American elites, but this bear market may offer Chinese builders a chance to forge distinctive paths.
a16z’s Chris Dixon describes Web3 as “the internet owned by builders and users.” This framing creates a clear moral dichotomy: on one side, capitalist-owned Web2 platforms that monopolize and exploit users; on the other, fair and empowering Web3. Yet such righteousness easily invites backlash—Twitter co-founder Jack Dorsey once tweeted directly: “Don’t be naive. You don’t own Web3. VC firms and their partners do.”
Chinese builders, however, do not get bogged down in ideological conflicts between Web2 and Web3.
Our Web3 builders embrace decentralization while seamlessly relocating to Dubai—a centralized financial hub—to seek solutions for financial democratization—this pragmatic spirit is precisely what thrives strongest in a bear market.
More than narratives, Chinese builders rely on original intent to build cohesion—“Never forget your初心; your初心 is making money.”
This simple, grounded初心—of getting things done—once propelled penniless Chinese immigrants crossing into Southeast Asia to become pillars of regional economies. It drove Alibaba, under the slogan “making business easier for everyone,” to rise as a Web2 giant. And we believe it will propel Chinese Web3 builders—whether Crypto Natives or Web2 migrants—to lead Asia’s next wave of billion-user innovations.
Web3 opens vast imaginative and operational space for new Web2 migrants, while the experience exported by Web2 builders helps Web3 craft killer applications for billions—this might just be the best version of “Web2 to Web3 migration” we’ll see emerge from this bear market.
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